Beef Prices Surge, Restaurants Face Profit Challenges
Beef prices are surging, with Restaurant Brands International, owner of Burger King, reporting a 'high teens' increase compared to 2024. Despite this, demand remains robust, benefiting restaurants but driving up costs.
The rise in beef prices is widespread, with most cuts seeing mid-to-high teen percentage increases. Texas Roadhouse and LongHorn Steakhouse have witnessed significant same-store sales increases despite these rising costs. However, LongHorn Steakhouse has seen a decline in profit margins due to higher beef costs.
Experts predict that the current high-cost cycle of beef could persist until 2027 or 2028. Shake Shack expects beef prices to rise by the mid-teens in the second half of 2025. This trend is affecting restaurant companies' profitability and could influence the pace of remodels at Burger King.
Beef prices have increased by about 16% in the past year for 81% lean ground beef. While demand remains robust, the rising costs are a challenge for restaurant chains. The full impact of these price hikes is expected to be felt over the next few years.
